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EXCLUSIVE INTERVIEW: Prem Watsa
24 November 2009
After years of fierce criticism, Prem Watsa’s long-term value investing approach has been fully vindicated. His firm Fairfax has made billions from the financial crisis.
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Prem Watsa has played the financial crisis beautifully. The chairman and chief executive officer of Canadian financial services firm Fairfax is one of the few people to have made money from the worst economic collapse since the 1930s.
While everyone watched in horror as the value of their investments tumbled, Watsa was racking up the profits. Fairfax has made billions through clever use of hedging and credit default swaps.
The past two years have provided a resounding vindication of Watsa’s approach. Following what Watsa describes as a “biblical seven lean years” between 1998 and 2005 – when Fairfax made no money in aggregate despite hard market conditions for most of that time, and withstood a barrage of reserve increases, restatements and fierce criticism – his firm is now firing on all cylinders.
It had net earnings of $2.8bn after tax between 2006 and 2008, and its book value more than doubled...
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